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Wednesday, July 27, 2011

Adimab does it / Ablexis does itEven Stemmer's Amunix has done itLet's do it / Let's find a new corporate structure that allows us to separate drug discovery from development so that we can sell the assets more easily!

Ahem.

It needs work. Cole Porter's version was a little snappier.

But our toes are tapping because, yet again, an early-stage firm with a promising technology -- or in this case, an experienced drug-discovery team -- is launching with a novel structure tailored to the new reality of the biotech business. The firm is Inception Sciences, and its two founders, Brad Bolzon and Peppi Prasit, are fresh off the pending sale of Amira Biosciences to Bristol-Myers Squibb, which you can read about here.

The next edition of "The Pink Sheet" Daily will have a more detailed explanation of Inception, which, like the movie, is a bit tough to get the old noggin wrapped around. In general, however, Inception follows in the footsteps of other biotechs that want to:

- Keep the platform or discovery technology in a holding company and the development-stage assets in separate corporate entities, thus creating the opportunity for more streamlined acquisitions.

- Let investors invest "a la carte."

- Find a way to return cash to investors faster without selling the underlying science.

There are several variations on the theme, as our little ditty above indicates. Amunix has created a half life-extension technology now behind products in two spin-outs: Versartis and Diartis. There's also Nimbus Discovery, which our START-UP colleagues wrote about here, and the antibody platform firm Adimab and its clone Arsanis.

Still, not everyone can hum the tune: the extra layers of administration and bureaucracy can be too much for a lean biotech with inexperienced backers. But in a business where the people with the cash are growing ever-more impatient, it's not a trend going away soon.

There is quite a bit of this new model going around in the biotech venture community. Several VCs have raised funds or have allocated a portion of their funds to acquire assets that they will develop internally. Their motivation is to see if they can use their venture partners and internal staff to develop novel drugs without forming a company and hiring a full time management team. To make this work for their investor, they form LLCs for each of the assets. That way the founders can participate in a specific program and receive an upside if the asset is divested at a profit.

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